Trump Working To Save Jobs At Chinese Company Hit By U.S. Sanctions
LAKSHMI SINGH, HOST:
It seems like a stunning reversal for a president who constantly talks about China stealing American jobs. Donald Trump now says he wants to save jobs in China. Today, the president tweeted - President Xi of China and I are working together to give massive Chinese phone company ZTE a way to get back into business fast. President Trump goes on to tweet - too many jobs in China lost. Commerce Department has been instructed to get it done.
Well, just last month, the administration banned shipments of American technology to ZTE for seven years on the grounds that the Chinese electronics giant violated a settlement over illegal shipments to North Korea and Iran. And then last week, the company said it would cease major operations because of the U.S. trade restrictions. Roger Cheng of CNET is following the story. He joins us via Skype. Thanks for joining us, Roger.
ROGER CHENG: Thanks for having me.
SINGH: So just to recap for us. What is ZTE, and what is its business model?
CHENG: Sure. ZTE is one of the world's largest telecommunications equipment maker. In addition to making network equipment for cellphone services, they also create smartphone themselves. In fact, they are the fourth-largest smartphone maker in the U.S. You probably don't recognize the name, but they make a lot of budget phones that show up at Boost Mobile or Cricket Wireless. And so they're actually fairly popular here in the U.S.
SINGH: All right. Well, tell us, how did ZTE violate U.S. sanctions on North Korea and Iran?
CHENG: So they sold equipment to - U.S.-origin equipment to turn and got caught red-handed and ultimately came to a settlement which, you know, they had agreed to terminate a number of employees as well as reduce the bonuses of others and send letters of reprimand to various other employees within the organization. Now, they got rid of employees that they needed to, but they failed to properly reprimand some of the other employees that stuck around at ZTE. And so the Commerce Department enacted the denial which basically banned any U.S. company from selling any products, services, technology to ZTE.
SINGH: Why were these measures - the latest measures that the Commerce department took against ZTE, why were they considered such a death to this company?
CHENG: The term death sentence definitely got thrown around a lot. So this is a seven-year ban. Part the issue is it stems from really Google and Android. ZTE, like everyone else, uses Android - got an Android operating system to make smartphones. And this ban would have kept a lot of the key components of Android out of ZTE's hands. They wouldn't be able to use the Google Play Store, which is like selling an iPhone without an App Store. So it really curtailed ZTE's ability to really continue operating as a business. That's why you saw them disclose that they were shutting down their major operations.
SINGH: OK. So what did you make of President Trump's latest tweet?
CHENG: So it is absolutely a shocker. It's a surprising reversal for President Trump. Now, I had talked to sources who told me that ZTE was quietly trying to get the denial order reversed. And ZTE makes smartphones that really utilize a lot of American technology, companies like Qualcomm, which makes processors or Intel, which makes chips - Corning, which makes display glasses. A lot of these U.S. companies supply major components and software technology to ZTE products. So the argument that ZTE has been making quitely is that they actually invest a lot in the U.S. economy. Last year, they spent more than $2 billion purchasing technology from U.S. businesses. So that's probably an argument that helped sway President Trump.
SINGH: That's reporter Roger Cheng of CNET. Roger, thanks for joining us.
CHENG: Thanks for having me.
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